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January 2015, CEO of Intel was pleased to announce a $300 million plan to increase diversity within

the company, defending interest of women and underrepresented minorities. (Kabas, Jan 2015) In
2015, Starbucks has spent approximately $145 million on employees mainly to assist them with
college tuition fee. (Wahba, Oct 2015) These are recent examples of ethical leadership. Ethical
leadership has been an increasing concern in today’s businesses. Thus, what is ethical leadership?
Why would CEOs invest so much either in terms of money, time or efforts, being an ethical leader?

Ethical leadership is leadership that is directed by respect for ethical beliefs and values and for
the dignity and rights of others. It is clearly seen that there is a strong connection among ethics and
leadership that shall not be ignored.

Definition of ethics has been debated over time. There are 2 principal theories explaining ethics
contrary. (Dobrin, 2012)

Deontological ethics proposed the principle that duties and actions must be done ethically and
morally. Deontologically, a leader must comply to rules and regulation without the consideration of
final results for human welfare.

Contrary, teleological ethics proposed the idea of ‘a bad act can have good results’. This mean that
ethics in here could be justified by the end results. The best example of teleological ethics could be
practices of pharmaceutical industry over the past decades where testing medicine on animals,
violating animal rights is considered ethic because this is an unavoidable process to generate human
welfare.

Being an ethical leader, one has to understand the core values and having the courage to live them
in all aspects of life for the common good. (Center for Ethical Leadership, 2014) However, what is
good for the goose is not always good for the gander. Hence, how does leader determine what is
really ‘good’ for all? The 4Vs Model of Ethical Leadership, a method aligning the internal and
external factors to advance the common good is an efficient approach in solving this dilemma.
Internal Factors: Beliefs and Values

External Factors: Behaviours and Actions

Advocated by Dr. Grace, developer of this model, ethical leadership begins with values.
Understanding core values is a crucial process to increase commitment, enthusiasm and drive. A
strong personal sense of differentiating right and wrong is needed.

Know Your Value

Lead Yourself

Lead Others

Create Common Good

A vision is the ability to frame actions and to think of consequences of vision set on others.

Establish Vision = Setting Goals

Plan to Accomplish Vision, Creating Common Good

Voicing out vision in very transparent manner is crucial to communicate with others because a
strong “voice” is authentic, convincing, animated and motivated. Only then, ‘TRUST’ will be built
among leaders and subordinates.

Last but the most crucial V—Virtue. With virtue, we should always remember that ‘we are what we
practice’. Therefore, we could understand ‘virtue’ as a ‘COMMITMENT’.

In my opinion, a good ethical leader should always refer to 4Vs model, assessing the impact(s) of
his/her leadership style, ensuring common good to all.

On September 2016, Wells Fargo who once the top firm in banking world reported with massive
fake-account scandal, one of the biggest corporate scandals in year 2016. (Silogambros, Sept 2016)
This firm was caught creating more than 2 million fake accounts under actual customers'
names over the past decade. Employees were caught doing so with the objective of boosting
the banks fee income, meeting internal sales goals. The bank was fined with $186 million.
Other than the lofty fines, the biggest hit to the bank was on its reputation, leading to
stakeholders’ backlash.

Other than Intel and Starbucks, Ford Motor Company who was listed as top world’s ethical
firms for eight straight years. (White, Mar 2017) According Ford’s CSR profile, Ford has
been contributing on sustainability, addressing environmental issues. Some CSR highlights
of Ford included being the first automaker joining the CDP Water Disclosure program in
2010, innovated liquid-cooled battery system, extending battery life, financial contribution to
local high schools and so on. (Csrwire.com. (2017)
Ethical leadership has been an increasing concern in today’s world especially in business world.
Volkswagen AG reported a massive loss of $6.2 billion and big number of investor and customer
backlash due to its pollution scandal. (Kuehner-Hebert, April 22, 2016) Besides, it has been a long
struggle for Nike due to its Sweat-shop scandals over the past decades. In conclusion, leaders are
crucial component forming the founding set of beliefs, organizational culture of a firm which will
direct affect the organizational behaviour. An organization having strong and healthy organizational
behavior is always a powerful tool in its expansion by maintaining public image, and building
stakeholders’ confidence. (Robbins & Judge, Organizational Behaviour, Pearson 15edn 2013, pg.
557)

Reference

1. Csrwire.com. (2017). Ford Motor Company - Corporate Social Responsibility News, Reports
and Events – CSRwire.com. [online] Available at: http://www.csrwire.com/members/12932-
ford-motor-company [Accessed 24 Sep. 2017].
2. Psychology Today. (2017). 3 Approaches to Ethics: Principles, Outcomes and Integrity.
[online] Available at: https://www.psychologytoday.com/blog/am-i-right/201205/3-
approaches-ethics-principles-outcomes-and-integrity [Accessed 24 Sep. 2017].
3. Robbins, and Judge, (2013). Organizational Behaviour. 15th ed. Pearson, p.557.
4. VW Posts $6B Loss on Emissions Scandal Costs .CFO. (2016). [online] Available at:
http://ww2.cfo.com/financial-performance/2016/04/vw-posts-6b-loss-emissions-
scandal-costs/ [Accessed 24/09/2017].
5. Vasilogambros, M. (2016). Wells Fargo Fined $185 Million for Phony Accounts.
[online] The Atlantic. Available at:
https://www.theatlantic.com/news/archive/2016/09/wells-fargo-phony-
accounts/499232/ [Accessed 24 Sep. 2017].
6. World’s Most Ethical Companies 2017: Ford, S. (2017). World's Most Ethical
Companies 2017: Ford, Microsoft, Starbucks Make the List | InvestorPlace. [online]
InvestorPlace. Available at: https://investorplace.com/2017/03/worlds-most-ethical-
companies-ethisphere-institute/#.WcfDEsiGPIU [Accessed 24 Sep. 2017].